Radiohead sue Parlophone, lawyers debate possible impact

Radiohead have sued their former label Parlophone, it has emerged, in a dispute over deductions made from their download income back in 2008 and 2009, when the record company – which is now a Warner Music subsidiary – was still part of EMI.

The deductions, which totalled £744,000, relate to costs incurred by the label back in 1992 and 1998. Media lawyer Howard Ricklow at law firm Collyer Bristow recently published his thoughts on this potentially big case, which has caused some interesting chatter in music law circles since the High Court allowed it to proceed earlier this month.

While record labels deducting old costs from new royalties isn’t unusual in the music industry, Radiohead’s legal reps argue that these deductions were in breach of the band’s record contract, which pre-dated the digital age, because no agreement was in place for charging old costs to download income.

Explaining the basics of the case, Collyer Bristow says: “Most recording contracts contain a provision that royalties for recordings on ‘future formats’ will be paid at a rate to be agreed. The band contends that no such rate was agreed with Parlophone for digital downloads and that the deductions made in 2008 and 2009 for costs apparently incurred in 1992 and 1998, long before the advent of digital downloads, were in breach of the contract”.

Specifics of the case are as yet not clear, though we do know that Warner Music attempted to have the matter dismissed on the grounds that there is a contractual time limit for the band to dispute deductions made on their royalties, and that deadline had passed. But Radiohead’s reps argued that, as there was no specific agreement about the band’s digital royalties, there was no deadline on disputes either. And the court concurred with the band on that point, allowing the case to proceed.

There have, of course, been numerous cases, mainly in the US, where artists claim that labels have incorrectly interpreted pre-digital record contracts for the digital age, or have unfairly applied terms covering CD sales to download sales, so to benefit the record company. The details of this case seem to be different to those other disputes, though the basic issue – whether labels can just apply old record contracts to new revenue streams – is the same.

Commenting on the Radiohead/Parlophone dispute, and its potential impact, Ricklow wrote: “It’s virtually impossible for anyone to predict how we’ll be listening to music in ten or fifteen years’ time, but it’s certainly possible to honour contractual agreements over royalties for recordings, no matter what format they are in. This case is particularly ironic, given that Parlophone went through very similar legal issues with the Beatles in the 1980s when CDs were a new media format”.

Ricklow notes that Radiohead have not worked with Parlophone on new releases for a long time now, and the band’s relationship with EMI seemed to deteriorate after its acquisition by Terra Firma back in 2007, and the resulting cull of the UK major’s top management.

He continues: “The fact that Radiohead are no longer contracted to Parlophone may well have played a role in how Parlophone has approached this issue – record labels have no reason not to squeeze every penny out of recordings by artists that are not on their roster anymore, especially as the value of recordings continues to fall. The fact that this case is now moving forward may well encourage other artists to mount legal challenges against record labels over their royalty payment practices, but only the biggest acts are likely to have the funds to be able to do it”.